According to code fragments discovered in iOS 7 beta builds (but now iOS 6), Apple is internally testing voice dictation that does not require an Internet connection. Currently if a user wishes to use the voice-to-text function, the OS uploads their speech to cloud to convert it to text, then it is downloaded back to the phone. Since this requires an active Internet connection, it often was slow or not present at all depending on the speeds of the connection.
Future version of iOS could allow iDevices to convert the speech to text right on the device itself. Since no internet connection would be required, the conversion process would be much quicker.
Perhaps Apple would let users opt to use the offline version or have the OS determine which is the best option depending on connection speeds. Additional files are obviously required for offline dictation to occur, so those who do opt to use offline dictation would have less storage space.